MCX-Lead faces a key resistance ahead

Gurumurthy K | | | Updated on: Apr 19, 2018

Wait for rallies and go short

The Lead futures contract on the Multi Commodity Exchange (MCX) fell towards ₹150 per kg last week, as expected. However, the contract made a low of ₹149.8 on Friday last week and has reversed higher from there. The contract has surged over 3 per cent from this low and is currently trading at ₹155 per kg.

Resistance ahead

Immediate support is in the ₹154-₹153 region. If the contract manages to sustain above this support zone, an upmove to test the next key resistance level of ₹158 – the 200-day moving average is possible. Whether the contract breaks above this hurdle or not will decide the next trend.

A strong break above ₹158 will see the current upmove extending to ₹161. The downside pressure will ease in such a scenario. Further break above ₹161 will increase the likelihood of the contract targeting ₹165 and ₹167 levels over the medium term.

On the other hand, if the MCX-Lead futures contract reverses lower from ₹158, it can come under renewed pressure. Such a reversal will keep the overall downtrend that has been in place since February intact. In such a scenario, the contract can fall to ₹153 again. An eventual break below ₹153 will then increase the possibility of the contract falling towards ₹148 over the medium term.

Trading strategy

Traders can wait for rallies and go short if the contract reverses lower from ₹158. Stop-loss can be placed at ₹162 for the target of ₹150. Revise the stop-loss lower to ₹156 as soon as the contract moves down to ₹154.5.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading.

Published on April 19, 2018
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